 Note: Yellow highlighted is for PPT, bold texts are for explanation.

Cost Analysis

There are several cost concepts relevant to the business operations and decisions and for the
convenience of understanding these can be grouped under two overlapping categories:

 [Greetings!] I am to present to you the introduction of Cost Analysis and its

overlapping categories. Cost Analysis enables businesses to evaluate the
value of a decision. It involves quantifiable financial measurements, such
money generated and costs reduced as a result of the project's choice. To
details the Cost Analysis, now let’s talk about its two categories.

Cost Concepts Used for Accounting Purposes: Generally, the accountants use these cost
concepts to study the financial position of the firm. They are concerned with arranging the
finances of the firm and therefore keep a track of the assets and liabilities of the firm. The
accounting costs are used for taxation purposes and calculating the profit and loss of the firm.
These are: Opportunity Cost, Business Cost, Full Cost, Explicit Cost, Implicit Cost, Out-of-
Pocket Cost and Book Cost

 The first one is the Cost Concepts used for Accounting Purposes, this kind
of concept is useful for accountants since they have a responsibility to
maintain a record for companies assets and/or liabilities. This is also
helpful to easily trace costs [Mention the blue highlighted] with that, the
company would be aware and may control those costs.
Analytical Cost Concepts Used for Economic Analysis of Business Activities: These cost
concepts are used by the economists to analyze the likely cost of production in the future. They
are concerned with how the cost of production can be managed or how the input and output can
be re-arranged such that the overall profitability of the firm gets improved. These costs are:
Fixed Cost, Variable Cost, Total Cost, Average Cost, Marginal Cost, Short-run Cost, Long-Run
Cost, Incremental Cost, Sunk Cost, Historical Cost, Replacement Cost, Private Cost, Social
Cost.

 And lastly, the Analytical cost concepts used for economic analysis of
Business Activities, this concept helps the business to forecast and
analyze the possible costs in the future. The goal of this concept is to be
efficient or to be a cost leader without affecting the quality of the business
performance. Most of the time this concept is concerned to the following
costs [Mention Green highlighted]
Cost Analysis
Cost management is always high on the agenda, and ACT teams may tackle a wide range of
issues involving cost analysis.

 The process of estimating, assigning, and controlling project expenditures

is known as cost management. A company can reduce the risk of cost and
time overruns by predicting future expenses through the cost management
process. On this part, cost analysis involves.

Typical Cost Analysis Project

A common situation is a client facing a serious budget deficit, asking the team to provide advice
on how and where to cut program or administrative costs.

 On this part, you are analyzing which cost is not essential in business
operations so that i-eelimenate na siya to lessen the expenses.